what is MICR and how to read? what is RBI?

UPDATING BANK SAVING ACCOUNT

Magnetic Ink Character Recognition (MICR) Line?

The term magnetic ink character recognition (MICR) refers to the line of numbers that appears at the bottom of a cheque The MICR line is a group of three numbers, which are the check number, account number and bank routing number. The MICR number includes the magnetic ink character recognition line printed using technology that allows certain computers to read and process the printed information.

• Magnetic ink character recognition is the line on the bottom of a personal check that includes the account, routing, and check numbers. 
• MICR numbers are readable by individuals and computers, where its special font helps limit check fraud. 
• The technology is also used to print financial forms, credit card invoices, and rebate coupons.
• MICR benefits include quickly facilitating routing information and making it difficult to alter checks. 

HOW TO READ YOUR CHEQUE

 Given below is the lowdown of numbers written on the cheque-
  
1. Cheque number- The first six digits represent the cheque number. It is important because if you misplace your cheque or money is not credited, you can track its status by providing the cheque number.

2. MICR- It is used for Magnetic Ink Character Recognition. It is a technology which is used in the banking sector in printing the MICR codes. It is printed using the magnetic ink so that numbers are readable even if it stamped over. Banks use cheque reading machine which helps to identify the bank and the branch code to sort the cheques faster. 

3. MICR code- It is a 9-digit code that identifies a bank and a branch participating in an Electronic Clearing System (ECS). The first 3 digit of the code represents the city code (meaning city in which you have a bank account), the next three represent the bank code (bank in that particular city) and last three represents the branch code (specific branch of the specific bank). MICR code is located at the bottom of a cheque leaf which is next to the cheque number.   

4. Account number- The next six digits mentioned after MICR code is the Account number. 

5. Transaction ID- At the end, there are two digits. These represent transaction ID, indicating whether the cheque is a local or payable at par cheque.

 6. IFSC- It stands for Indian Financial System Code. It is an 11-digit alpha-numeric code which is used to identify any bank branch participating in any Reserve Bank of India (RBI) regulated funds transfer system. It helps to transfer money using RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer) or IMPS (Immediate Payment Service) method. The first four digits of the IFSC represent the bank and last six characters represent the branch. The 5th character is zero. 

E-banking in India

In India, since 1997, when the ICICI Bank first offered internet banking services, today, most new-generation banks offer the same to their customers. In fact, all major banks provide e-banking services to their customer.

Popular services under e-banking in India

·        ATMs (Automated Teller Machines)

·        Telephone Banking

·        Electronic Clearing Cards

·        Smart Cards

·        EFT (Electronic Funds Transfer) System

·        ECS (Electronic Clearing Services)

·        Mobile Banking

·        Internet Banking

·        Telebanking

·        Door-step Banking

Further, under Internet banking, the following services are available in India:

1.    Bill payment – Every bank has a tie-up with different utility companies, service providers, insurance companies, etc. across the country. The banks use these tie-ups to offer online payment of bills (electricity, telephone, mobile phone, etc.). Also, most banks charge a nominal one-time registration fee for this service. Further, the customer can create a standing instruction to pay recurring bills automatically every month.

2.    Funds transfer – A customer can transfer funds from his account to another with the same bank or even a different bank, anywhere in India. He needs to log in to his account, specify the payee’s name, account number, his bank, and branch along with the transfer amount. The transfer is effected within a day or so.

3.    Investing – Through electronic banking, a customer can open a fixed deposit with the bank online through funds transfer. Further, if a customer has a demat account and a linked bank account and trading account, he can buy or sell shares online too. Additionally, some banks allow customers to purchase and redeem mutual fund units from their online platforms as well.

4.    Shopping – With an e-banking service, a customer can purchase goods or services online and also pay for them using his account. Shopping at his fingertips.

 

HOW TO GO ON NET FOR ONLINE BANKING

Here are the few steps on how you can simply register for net banking online:

Step 1: Visit www.onlinesbi.com

Step 2: After the online SBI home page appears, click the 'Login' button on the personal banking section

Step 3: A new page will appear, click on 'Continue to Login.'

Step 4: After that a new login page is displayed, there click on the link 'New user? Register here.'

Step 5: A new pop-up will appear on the same screen asking (If you have already obtained Pre-Printed Kit from the branch for activating INB facility, please don't proceed with this link. You can input user ID and password given in PPK on normal login screen.) Click 'OK' in the alert message box.

Step 6: A tab will open, asking you to register yourself as a new user. Select 'New User Registration' option and click on 'Next'.

Step 7: A new page will be displayed on your screen asking you to fill the 'User Driven Registration' form. Enter all your details over here-- Account number, CIF number, branch code, country, registered mobile number, facility required, and code. You can find all the details of your account number, CIF number details, and branch code on the front page of your passbook.)

Step 8: Recheck all the entered details and click on 'Submit'

Step 9: If all your details are correct then a one-time password (OTPwill be sent to your registered mobile number. Enter the OTP and click on 'Confirm.'

Step 10: After that select the option 'I have my ATM card (Online registration without branch visit)' and click on 'Submit.'

Step 11: You have to enter the required your ATM card details and the code to enter. After that click on 'Submit'

Step 12: Your temporary user name will be displayed and you will be asked to create your login password. Create a new login password (Your password must consist of at least 8 characters and should be a combination of upper case and lower case alphabets and at least one number and one special character.)

Step 13: Re-enter the password to confirm. After that click on 'Submit'.

Step 14: When your registration is done successfully, you have to log in to internet banking services with the temporary username and password.

Step 15: After that again go to the home page and click the login button in the personal banking.

Step 16: Login with temporary username and password.

Step 17: Again, you have to create a temporary user name of your choice. Select the terms and condition and click on 'Submit'.

Step 18: After submitting, a new page will be displayed. Here you will be asked to create a new login password. These passwords are different from the previous one.) Click on 'Confirm'

Step 19: After that, a page will be displayed asking you to enter all the required details like, enter profile password, confirm profile password, hint question. You have to select the secret question from the list and provide answers to them that can help you in future in case you forget your password.)

Step 20: After that, you need to enter some more details (Place of birth, country and mobile number as registered in the bank's record). After that Click on 'Submit'.

Pros and Cons of E- Banking

Advantages	Disadvantages
An online account is simple to open and easy to operate.	Understanding the usage of internet banking might be difficult at the first. That said, there are some sites which offer a demo on how to access online accounts (not all banks offer this). So, a person who is new to technology might face some difficulty.
It's convenient, because you can easily pay your bills and transfer your funds between accounts from nearly anywhere in the world.	You cannot have access to online banking if you don’t have an internet connection; thus, without the availability of internet access, it may not be useful.
You do not have to stand in a queue to pay off your bills. Also you do not have to keep receipts of all of your bills, as you can now easily view your transactions.	Security of transactions is a big issue. Your account information might get hacked by unauthorized people over the internet.
It is available all the time. You can perform your tasks from anywhere and at any time, even at night or on holidays when the bank is closed. The only thing you need to have is an active internet connection.	Password security is a must. After receiving your password, change it and memorize it. Otherwise, your account may be misused.
It is fast and efficient. Funds get transferred from one account to the other very fast. You can also manage several accounts easily through internet banking.	Your banking information may be spread out on several devices, making it more at risk.
You can keep an eye on your transactions and account balance all the time.	If the bank’s server is down, then you cannot access your accounts.
You can get to know about any fraudulent activity or threat to your account before it can pose any severe damage.	If the bank's server is down, due to the loss of net connectivity or a slow connection, then it might be hard to know if your transaction went through.
It's a great medium for the banks to endorse their products and services.	You might get overly marketed too and become annoyed by notifications. That said, these can easily be turned off.
More online services include loans and investment options.	You might become annoyed by constant emails and updates.

 

RBI – Reserve Bank of India

The Reserve Bank of India (RBI) is India’s central bank, also known as the banker’s bank. The RBI controls monetary and other banking policies of the Indian government. The Reserve Bank of India (RBI) was established on April 1, 1935, in accordance with the Reserve Bank of India Act, 1934. The Reserve Bank is permanently situated in Mumbai since 1937.

Establishment of Reserve Bank of India

The Reserve Bank is fully owned and operated by the Government of India.

The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:

• Regulating the issue of Banknotes
• Securing monetary stability in India
• Modernising the monetary policy framework to meet economic challenges

The Reserve Bank’s operations are governed by a central board of directors, RBI is on the whole operated with a 21-member central board of directors appointed by the Government of India in accordance with the Reserve Bank of India Act.

The Central board of directors comprise of:

• Official Directors – The governor who is appointed/nominated for a period of four years along with four Deputy Governors
• Non-Official Directors – Ten Directors from various fields and two government Official

Major functions of the RBI are as follows:

1. Issue of Bank Notes:

The Reserve Bank of India has the sole right to issue currency notes except one rupee notes which are issued by the Ministry of Finance. Currency notes issued by the Reserve Bank are declared unlimited legal tender throughout the country.

2. Banker to Government:

As banker to the government the Reserve Bank manages the banking needs of the government. It has to-maintain and operate the government’s deposit accounts. It collects receipts of funds and makes payments on behalf of the government. It represents the Government of India as the member of the IMF and the World Bank

3. Controller of Credit:

Since credit money forms the most important part of supply of money, and since the supply of money has important implications for economic stability, the importance of control of credit becomes obvious. Credit is controlled by the Reserve Bank in accordance with the economic priorities of the government.

4. Exchange Management and Control:

One of the essential central banking functions performed by the Bank is that of maintaining the external value of rupee. The external stability of the currency is closely related to its internal stability the inherent economic strength of the country and the way it con­ducts its economic and monetary affairs.

Domestic, fiscal and monetary policies have, therefore, an im­portant role in maintaining the external value of the currency. Reserve Bank of India has a very impor­tant role to play in this area.

 5.Promotional and Developmental Functions:

Apart from these traditional function, the RBI performs various activities of promotional and developmental nature. It attempts to mobilise savings for productive purposes. This is done in various ways. For instance, RBI has helped a lot in building the huge financial infrastructure that we see now.

6.Foreign Exchange Management

• To oversee the Foreign Exchange Management Act, 1999.
• To facilitate the external trade and development of the foreign exchange market in the country.

7.Other Functions

• To promote and perform promotional functions to support national banking and other financial objectives.
• To offer banking solutions to the Central and State Governments.
• To act as a banker for the Central and State Governments.
• To be the Chief Banker to every bank across the country and maintain all the banking accounts of every scheduled bank.

Objectives of the RBI

The primary goals of the RBI according to the Preamble of the same are as follows.

• To regulate the issue of Banknotes.
• To secure monetary stability in the country.
• To meet the economic challenges by modernising the monetary policy framework.

The primary focus of the RBI is to supervise and undertake initiatives on behalf of the financial sector which consists of financial institutions, commercial banks, non-banking financial companies. A few critical efforts of the RBI are to restructure bank inspections and fortifying the role of statutory auditors in the banking system.